Pharma funds top returns chart

The pharmaceutical funds category, with 2.15 per cent average return, was the top performer in March, but could not beat the BSE Healthcare Index that rose 4.30 per cent.

Diversified equity, tax-planning, fast moving consumer goods, and automobile funds categories ended the month in the negative territory.

Automobile funds were worst-hit, registering 5.22 per cent negative average return.

Fears of a slowdown in demand for vehicles because of rising interest rates pulled down shares of automobile companies, and in turn the returns of automobile funds.

On the debt side, liquid funds topped the chart with 0.69 per cent average return. Returns of short-term funds improved in March, as the rates of short-term debt papers peaked amidst tight interbank liquidity.

Performance of gilt funds improved in March, with 0.41 per cent average return. This category had posted negative average return of 0.33 per cent in February. 
 

ODD NUMBERS
Equity funds	Feb	Mar
Pharma	-6.64	2.15
Index	-8.16	1.49
Banking	-9.23	1.35
Technology	-6.55	0.04
Diversified	-8.06	-0.14
Tax Planning	-8.28	-0.75
FMCG	-7.04	-0.78
Auto	-8.02	-5.22
Hybrid fund
Monthly income	-1.18	0.25
Equity-oriented balanc	-5.16	0.19
Debt	Feb	Mar
Liquid funds	0.56	0.69
Short-term floaters	0.55	0.66
Short-term income	0.13	0.62
Long-term floaters	0.51	0.59
Short-term gilt	0.25	0.52
Long-term gilt	-0.33	0.41
Medium-term income	0.06	0.34
Debt-oriented balanced	-2.09	0.07
Asset allocation	-6.76	-0.7

In March, all fund categories witnessed an improvement in average returns over the previous month.

Sector funds: Franklin Pharma, with 3.39 per cent return, was the top performing pharmaceutical fund followed by UTI Pharma and Healthcare with 3.07 per cent return.

Pharmaceutical shares rose in March on value buying as well as company specific developments, thereby boosting the returns of pharma sector funds.

In March, the Dr. Reddy's Laboratories stock gained on reports that it may be able to market amlodipine besylate tablets in U.S. from April 12, when the drug goes off-patent.Shares of Lupin and Glenmark Pharmaceuticals rose because of improved advance tax payment in the March quarter.

Lupin paid Rs 45 crore as advance tax for January-March, compared with Rs 15 crore during the same period last year. The advance tax payment figure of Glenmark Pharmaceuticals stood at Rs 7 crore, compared with Rs 50 lakh.

Banking funds category was second in the chart with 1.35 per cent average return. They could not beat the CNX Bank Index that rose 1.3 per cent.

Reserve Bank of India's decision to hike repo rate and banks' cash reserve ratio did not impact shares, as the announcement came after market hours on Friday.

In a surprise move, RBI Friday hiked the repo rate by 25 basis points to 7.75 per cent with immediate effect and CRR by 50 basis points to 6.50 per cent. The CRR hike, which will drain Rs 15500 crore from the banking system, will be implemented in two equal stages - on April 14 and April 28.

Information technology funds managed to post 0.04 per cent average return. In comparison, the BSE IT Index and the CNX IT Index rose 0.6 per cent and 1 per cent, respectively.

Concerns over slowdown in the US economy along with appreciation of the rupee against the dollar had a bearing on IT stocks, as these companies derive a major chunk of their revenue from exports.

DSPML Technology was first, with 1.73 per cent return, while schemes like Birla Sun Life New Millennium, Pru-ICICI Technology, and Magnum IT registered 0.15 per cent, 1.44 per cent, and 1.44 per cent negative returns, respectively.

FMCG funds category posted 0.78 per cent negative average return, under-performing the BSE FMCG Index that rose 2.62 per cent.

The two automobile sector schemes - JM Auto Sector and UTI Auto Sector - gave 5.17per cent and 5.27 per cent negative returns, respectively.

Equity index funds : In index funds, Pru-ICICI Index and Nifty Junior BeES topped, with 2.5 per cent returns each. Out of 22 index funds, 15 schemes could beat Bombay Stock Exchange's Sensex that rose 1.04 per cent. On the other hand, 7 schemes out of 22 could fare better that National Stock Exchange's Nifty that rose 2.04 per cent Birla Index scheme was the only one to give 0.38 per cent negative return.

The top three diversified equity schemes were: Birla Sun Life Frontline Equity (3.45 per cent return), BOB Diversified (3.18 per cent), and Birla Index Gennext (2.71 per cent).Out of 172 schemes, 32 beat Sensex and 7 outperformed Nifty. In diversified funds, 78 schemes posted negative returns.

Among equity-linked savings schemes, Franklin India Index Tax, with 2.15 per cent return, was the only scheme to beat Nifty. Out of 29 tax-saving funds, only four could beat Sensex. As many as 17 schemes gave negative returns. Reliance Tax Saver was worst-hit, with 5.27 per cent negative return.

High cash levels in the portfolio in a volatile market was one of the reasons for lower returns from equity schemes.

Debt funds: On Friday, the 10-year benchmark gilt, 8.07 per cent, 2017 closed at Rs 100.42 or 8.0044 per cent yield-to-maturity, compared with Rs 100.55 rupees or 7.9862 per cent yield a month ago.

Government bond yields hardened in March because of a combination of factors such as acute interbank liquidity due to corporate advance tax payment, surge in call money, rise in domestic inflation and worries over the rise in interest rates.

The last installment of corporate advance tax payment for the year ended March drained off nearly Rs 50000 crore from the banking system. The call rate shot up to 70-75 per cent, as banks rushed to meet their mandatory reserve requirements.

The rise in call money rate pushed up rates of short-term debt papers to 12-12.5 per cent, leading to higher returns from liquid schemes.

The best liquid fund was Quantum Liquid Fund, with 0.83 per cent return, while CanFloating Rate bagged the first rank in short-term floaters with 0.81 per cent return.